It’s never easy to take one for the team, but when you’re the boss, the buck stops with you. Sometimes that means the bucks stop before they get to you. Such is the case with Credit Suisse. Twelve top executives with the company, including the CEO Tidjane Thiam, will see their bonus pay cut by a whopping 40 percent.
This cut comes after the bank posted a dismal 2016 annual report, including a loss for the second year in a row. After this news, when shareholders saw how much the leaders of the company stood to make via bonuses, they were none too pleased, forcing this change. After the board of directors approved the proposed pay cut, Thiam sent a letter out, published by CNN, expressing his hopes for a better 2017, saying in part: “I hope that this decision will alleviate some of the concerns expressed by some shareholders and will allow the executive team to continue to focus on the task at hand…”
That immediate task must be righting a ship that has been floundering for some time. The problems began with CS had to pay $5.3 billion to the United States Department of Justice as part of a settlement to close an investigation alleging the company packaged and sold bad mortgage loans over a two-year period, from 2005 to 2007.
As the company continued to try to find its way out of this morass, there were rounds of layoffs, cost cutting and restructuring. Thiam was brought in back in 2015, promising to lead a massive overhaul of the company and bring the bank’s focus back to wealth management and potential new markets.
But, in the past two years, Thiam has failed to deliver. His overhaul and other actions are not bringing the bank back to where shareholders want it to be. Accepting the pay cut with good graces is his first step in trying to get things back in order, but the leadership at Credit Suisse need to find an effective new strategy, and they need to find it fast.
Part of this plan must include a public relations campaign to gain ground with a European consumer market growing increasingly ill at ease with massive CEO pay, especially at investment banks. CEOs at other banks have seen their pay cut, and the public is calling for more. To right the ship, CS needs more customers and more money coming into the bank, and that will be tough to manage if people are watching leadership fail and still get paid.